Bouygues Lifts Telecom Unit Outlook as It Slashes Costs

Francois de Beaupuy

August 27, 2015 — 1:39 AM EDTAugust 27, 2015 — 6:58 AM EDT

Bouygues SA, the French building, media and telecommunications conglomerate, raised its 2015 profit target for its phone operations after rejecting a $11 billion offer for that unit from Altice SA in June.

Bouygues Telecom’s earnings before interest, taxes, depreciation and amortization will rise to about 750 million euros ($850 million) this year from 694 million euros in 2014, the Paris-based company said Thursday in a statement. It previously expected Bouygues Telecom’s profits to be stable.

“We’re in a strategy of profitable growth for Bouygues Telecom, and we’re seeing the first results of that,” Chief Executive Officer Martin Bouygues said at a conference in Paris. “Everybody will have to get used to a French phone market with four operators.”

Bouygues Telecom, which has been hit by a price war in the French market since 2012, says the quality of its network and portfolio of frequencies will boost revenue as subscribers increasingly watch videos and play games on their mobile devices.

The company said it’s ahead of its target to add 1 million mobile customers in the three years to 2017, and in line with its plan to add 1 million of Internet subscribers by then. It also said it will “significantly” outstrip its target for 300 million euros of telecom savings in 2016 versus 2013.

Bouygues shares rose as much as 6.9 percent in Paris trading today, and were up 6.1 percent at 33.46 euros at 11:50 a.m.

Construction Steady

For its construction business, the company repeated its prediction that, excluding exchange rate effects, the current operating margin will remain stable this year as it gains contracts abroad and it adjusts to lower demand for roadworks from cash-strapped French local governments.

“The French roadworks and construction markets aren’t brilliant,” the CEO said. On the other hand, housing demand is picking up and tenders for investments in the Paris area have started, he said.

Bouygues left its 2015 forecast for its broadcasting operations unchanged. Current operating profit for the whole company rose 51 percent in the first half to 119 million euros, Bouygues also said today. Bouygues posted a net loss of 42 million euros in the first half as revenue dropped 1 percent.